January 8, 2024
HONG KONG – Financial Secretary Paul Chan Mo-po has pledged to restore fiscal balance gradually after Hong Kong’s deficit ballooned this fiscal year in the aftermath of the COVID-19 pandemic.
Writing in his Sunday blog, he said many residents believe there should be a balanced budget, as consultations on the new budget proposals get underway.
The 2024-25 budget would also focus on seizing the opportunities to foster economic growth and development, injecting new momentum into the special administrative region’s development, progress, and improving people’s livelihoods, Chan said
The 2024-25 budget would also focus on seizing the opportunities to foster economic growth and development, injecting new momentum into the special administrative region’s development, progress, and improving people’s livelihoods, Chan said.
The SAR government launched a public consultation exercise on Dec 17 on the next fiscal year’s budget.
“During the pandemic, the government allocated substantial resources to combat the coronavirus, leading to a surge in public spending,” Chan said. “Government expenditures must now enter a period of consolidation.”
The financial chief is confident that fiscal balance can be restored. “We’re determined to strengthen public finances by cutting costs and increasing revenue.”
He acknowledged that maintaining robust public finances is crucial for ensuring sustainable and stable economic and social development. “However, this process must take into account the current reality — through full communication with society, and it should neither be too slow nor too hasty. Careful consideration must be given to the capacity of different social strata and the operating situations of various industries. For the most vulnerable groups in society, it’s essential to ensure they receive appropriate support and basic public services under the social security system.”
“As we are currently focused on growing the economy, attracting businesses, and gathering talents, considerations for generating revenue must also align with the actual stage of development. For instance, it’s essential to preserve the advantages of Hong Kong’s simple and low tax regime, and consider the financial burden on residents.”
Chan called for a review of certain public service fees and services provided under the “user-pays” principle, which are falling short of covering the costs, in an effort to reduce government spending.
In terms of boosting revenue, he suggested promoting high-quality development by upgrading traditional industries, identifying new growth areas, as well as integrating into national development plans.
Chan warned in October that the SAR’s fiscal deficit could exceed HK$100 billion ($12.82 billion) — doubling his earlier estimate for this financial year’s shortfall.
PwC Hong Kong has projected that the SAR government deficit could hit HK$110 billion for the 2023-24 fiscal year, which ends in March, based on projected revenues of HK$651 billion and expenditure of HK$761 billion.
Hong Kong recorded an estimated deficit of about HK$140 billion for the 2022-23 financial year.